The economic, demographic, and technological forces of change are continuing to drive disruption, confusion, and chaos. Against the backdrop of this ever-shifting landscape, TA Leaders are expected to deliver greater value to their organizations than ever before. So how are they planning to do this in the next 12 months? What are the strategic priorities, how are budgets being impacted, and where and how is AI being deployed to help?
My guest this week is Sven Elbert, Head of Analyst Services at Fosway Group. Fosway recently published TA Realities Research, a survey of European TA Leaders on their strategic priorities and budgets for the coming year. In our conversation, we dig into the details, discuss surprising results, and identify a significant issue with how AI is currently being used.
In the interview, we discuss:
• TA’s challenges and shifting priorities
• Budget pressure and significant implications for agencies
• How will TA deliver value to their organizations in 2026?
• The AI adoption cycle and cutting through the hype
• Why isn’t AI being used to solve strategic problems?
• Basic AI features versus transformational AI features
• What does the future look like?
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Transcript
00:00
Matt Alder
How can TA teams deliver value to their organizations in the next 12 months? The challenges are significant and priorities are shifting. AI certainly has a big part to play, but are TA leaders using it where it could be the most effective? Keep listening to find out.
00:19
Matt Alder
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01:10
Matt Alder
There’s been more of scientific discovery, more of technical advancement and material progress in your lifetime and mine than in all the ages of history.
01:25
Matt Alder
Hi there.
01:25
Matt Alder
Welcome to episode 739 of Recruiting Future with me, Matt Alder. The economic, demographic and technological forces of change are continuing to drive disruption, confusion and chaos. Against the backdrop of this ever shifting landscape, TA leaders are expected to deliver greater value to their organisations than ever before. So how are they planning to do this over the next 12 months? What are the strategic priorities? How are budgets being impacted? And where and how is AI being deployed to help? My guest this week is Sven Elbert, Head of Analyst Services at Fossway Group. Fossway recently published their latest TA Realities Research, a survey of European TA leaders on their strategic priorities and budgets for the coming year. In our conversation we dig into the details, discuss some surprising results and identify a significant issue with how AI is currently being used.
02:28
Matt Alder
Hi Sven and welcome back to the podcast.
02:31
Sven Elbert
Hey Matt, thank you for having me. How are you?
02:33
Matt Alder
I’m very good, thank you and it’s always a pleasure to have you on the show. Could you introduce yourself and tell everyone what you do for people who may not have heard you on the show before?
02:43
Sven Elbert
Yes, of course. My name is Sven Albert. I’m the lead Analyst for Talent Acquisition at Fosware Group and Phosphate Group is Europe’s number one industry analyst focusing on hr. So we go very deep in all the segments and work with a lot of international or European headquartered clients, help them make better buying decisions de risking those working with corporates around all sorts of technology. It’s a fun, interesting job. Obviously, as you can imagine, with AI taking precedence, I’m Kind of a tech geek since you know, my study days and like it’s never been more exciting than probably like the last 18 months, probably. So yeah, really excited, yes.
03:29
Matt Alder
I’m saying it’s kind of a time of massive change. So we’re going to talk about your latest acquisition realities research.
03:37
Matt Alder
Tell us a little bit about the.
03:38
Matt Alder
Research and how it’s put together.
03:41
Sven Elbert
Yeah, I mean there’s a couple of pieces actually that we have put out across the last couple of months. One is obviously the nine grids have come out in June which is a massive piece of research that looks at, you know, what are the corporates doing, what are the vendors doing as a side hustle if you like. We’ve done a bit of an AI NTA market assessment in July that came out. So that has gone really deep into what the vendors are doing in terms of their AI roadmaps and what has materialized in the software. How should corporates think about that?
04:15
Sven Elbert
And then very recently we have also published or probably imminently this week are publishing our Talent Acquisition Realities Research which is a big annual survey that we do which looks basically at like a couple of themes around strategy and priorities for the upcoming year, budgets, tech investment trends and all sorts of other things around hiring experience and the solutions landscape.
04:41
Matt Alder
Now we talked about last year’s report last year and it’s interesting to see how things might have changed from the talent acquisition perspective. And you kindly sent me a copy and I’ve sort of had a look through. And one of the big standouts right at the front is the pressure that TA teams are now under to deliver value within the kind of economic situation we find ourselves in.
05:03
Sven Elbert
Isn’t it if you follow the news. As you can tell, I’m from Germany given my accent. So every week or every day over the past couple of weeks we’ve had some concerning announcements of layoffs, restructuring going on at large companies, employers locally here. And this is the thing across Europe that hiring has shifted away from this growth driven urgency more into more defensive caution. And currently many TA teams, many TA leaders are kind of obviously having to make their plans for the 2026 budgets and are trying to figure out actually what our workforce hiring plans going to look like and what kind of budgets do we need to set aside for media spend, what to invest in terms of technology and these kind of things.
05:56
Sven Elbert
So the research really focuses on some of those kind of questions and it’s basically asking all these TA leaders to basically mirror it back to the Community and say, hey, this is what you guys have told us. And yeah, I mean, those are some of the interesting things we can talk about, if you like.
06:17
Matt Alder
Yeah, absolutely. So I think in terms of that sort of driving value, what are the things that people are sort of intending to focus on? Have the priorities shifted? Have they stayed the same? How are tier leaders planning to get that value for their businesses?
06:33
Sven Elbert
Absolutely. I mean, the fewer roles you have to fill, obviously quality becomes more important. In Europe, quality of hire has always been more important than in other regions of the world. And this is in the current period, the next year, even more important to focus on quality. So at the same time, candidate experience is also not up for debate. So those things continue to be really important despite the economic uncertainty. Maybe even especially during those times when, you know, you have bigger restructuring. Obviously candid experience for the positions that you’re filling is really important and something that you want to manage very actively as well. Speed. The need to hire faster had gone down last year. It’s probably a little bit up from last year now. So that’s probably definitely a priority we see moving up through the ranks again.
07:32
Sven Elbert
On the other hand, one that I kind of personally regret a little bit is the sharp decline in diversity, equity, inclusion. So that’s a big drop in terms of strategic importance across Europe. Not only Europe, but especially also in Europe. So in terms of value, what does that mean? I mean, I don’t want to say doing more with less. Right. Because that’s obviously the thing. But can AI be answer is obviously lot of organizations are asking themselves during these times, can we strategically introduce it in a way that it makes some of the pain points where we have not been able to be as efficient maybe as we would like to be. Can we introduce it then automate more?
08:20
Sven Elbert
And I think there’s a few stories that we see where this is actually the case, but it really is going across all of the steps in the funnel where companies are thinking, where does it create value? So I think that’s definitely. AI is maybe part of the answer. But there’s also for. For smaller businesses, definitely a lot they can do even without looking to AI, just by, you know, improving the existing processes and things and optimizing the career side and investing a bit more maybe in, you know, some automation on whatever, candidate relationship management, these kind of things.
08:57
Matt Alder
What’s the kind of impact on budgets? How are people sort of viewing their budget for the next year? Are there things that are focusing on more, things that they’re focusing on less how’s that sort of playing out?
09:08
Sven Elbert
Yeah, so there’s overall significantly more budget pressure in 46% of organizations that we have surveyed. So they are actually having less available to spend over the year ahead. 23%, however, have said we have a little bit more to spend and we haven’t asked how much, but at least. So this gives you an indication that the majority, slightly more organizations are tighter on budgets this year overall. And then in terms of where does the investment go? The ones that are hardest hit are recruiting agencies where a lot of companies are saying, no, this is obviously something which is a spend that we can cut because obviously maybe we are not hiring as much, for example, or we are going to insource a bit more internally. And this goes alongside a trend where companies are investing more in recruitment skills internally.
10:03
Sven Elbert
So that is definitely something also where, you know, maybe some of those new AI based technologies also require talent acquisition teams to upscale. There has been a lot of fluctuation recently. So also that means they probably now need to upscale them and you know, marketing skills, planning, workforce intelligence, there’s obviously quite a few new topics that TA is getting pulled into as well. Internal mobility even. So those kind of things obviously mean you kind of need to build out those skills ultimately, I think with so over, I mean, we can touch on it later a little bit as well. But the talent acquisition segment within HR is the furthest ahead in terms of AI adoption. So talent acquisition is probably at the forefront of adopting AI into within the HR department, of adopting it into the solution.
10:59
Sven Elbert
So that definitely sets TA professionals at the forefront of developing skills that they will be able to apply in other areas as well, should they want to and should they be open to it. So I think that also maybe has some interesting career growth opportunities. So recruiting skills obviously is one of the areas where companies are going to invest more into. Employer branding continues to be high up as well, where more 40% or roughly 40% are saying we want to invest more. Talent acquisition technology is also seeing more investment, but not as much maybe as in previous years. So there, the difference between the companies that say, oh, we actually need to reduce our talent acquisition technology spend is actually significantly higher than maybe 20, 23, 24, but there’s still obviously a slight majority wanting to invest more. So 31% over 20%.
11:58
Matt Alder
Yeah. Which I guess, which I guess kind of makes sense if people are sort of looking to AI to solve some of the challenges for them. Let’s talk a little bit more in depth about AI because there’s some sort of really interesting pieces in the report. Where are we kind of on the hype cycle? So obviously there’s a huge amount of hype around AI from the vendor space, from the commentary space, just from everything. Where are t people standing on it? Do they sort of believe that AI is the answer? Are they able to sort of cut through the hype and see what’s going on?
12:29
Sven Elbert
Yeah, so there’s obviously fully agree there’s a lot of hype out there. And if you believe the hype, then obviously gentic AI agents are going to replace everybody by next month or whatever. Right. Last month, actually. Right. So I think. And that obviously this is what our study around the AI market assessment was, focusing more in depth on a feature by feature level, but more on a summary level from the survey. We have found that there is more believers now obviously in AI internal acquisition technology. Why is that? Because companies have started to adopt, you know, not just ChatGPT or Copilot or whatever for their, you know, job description creation, but actually we’re seeing it move into the TA technology and getting adopted there. Customers are finding value in that and they are finding it’s actually producing better outcomes in certain areas.
13:25
Sven Elbert
So better conversion rates with career side visitors, the ability to create more, put more content out on the career side that is meaningful to candidates, which causes them to click the apply button or stay in touch with the company through community or whatever. So I think from that perspective, there’s less people that think that AI is overhyped and more people that think that there is actually something to it. And I mean, ultimately 90% of the respondents now believe that AI is going to have a bigger impact on their tat in a year’s time, which is up from 83% last year. I mean, this is probably as high as it can get. Right.
14:10
Matt Alder
You’ve kind of touched on this throughout the conversation so far.
14:12
Matt Alder
But what are the sort of the.
14:14
Matt Alder
Key reasons that people want to adopt, you know, Want to adopt AI?
14:18
Sven Elbert
The major reason is around efficiency increases, which 85% say, okay, if we are going to adopt it, then that is one of the major drivers. Cost reduction is another one. 65% have named that as a major driver and 58% have said scalability or scale. Right. So. And all of the other criterias are a little bit too far behind for my personal taste. Remember, we said strategic priorities are quality of fire and improving candid experience. So then why are these not at the same level of priority for adopting AI? They should be. So whenever companies and everybody needs to be building a business case around these kind of investments because, you know, not pocket money. Right.
15:08
Sven Elbert
So my recommendation is to always put some of these, you know, more strategic outcome based metrics also inside the business case and use that as a leverage to then improve quality of hire. If you’re just improve, if you’re just introducing AI into the company for increased efficiency, you might be optimizing for the wrong thing. Right? Because ultimately you want to have a competitive advantage, you want to have a better candidate experience, you want to have better quality of fire, you want to have more talent, intelligence. And I think that is also something where we need to move maybe away from these rather basic AI features to the more transformational AI features. And this is where then probably some of the more co pilot, more the agentic kind of use cases come into play.
15:57
Matt Alder
That really reflects what I’m seeing in the market as well in terms of where the adoptions got to and the potential that isn’t sort of being fulfilled. What are the main challenges that employers have when it comes to adopting AI in ta? What is it that’s holding things back?
16:14
Sven Elbert
Yeah, so multiple problem spaces here really, if that makes sense. Obviously one is the economic situation and budget limits, which is more a commercial, financial kind of situation thing. The other one is around compliance and GDPR next year also 2026 we have the EU AI come into effect for high risk AI systems and recruitment definitely falls into that category. So this is what currently a lot of vendors, but also a lot of companies obviously having to put their heads around what does that mean for them next? Should that slow down their AI decision making, should that accelerate it, whatever. So I think that is what obviously a lot of companies are currently figuring out as we speak. But then also what is still top of mind.
17:09
Sven Elbert
I mean you obviously hear the legal cases in the US and everything is around bias concerns, AI reliability, fairness, those kind of things. Ethical use of AI is really important for people and those concerns are not easily. You need to have understanding of that as well. And this is what also is in terms of the upscaling discussion where a lot of the maybe the CIO has been more in the lead with that and has been driving more of the AI decisions so far. I think it’s swinging back a little bit to HR and to the TA teams as now we actually need to answer what are the use cases? What are the things that we want to invest in? What are the processes we want to change and reshape?
18:01
Sven Elbert
And this is Obviously where you then need to have some serious discussions with the TA team or the HR team around what it is that you actually want to do. So, I mean, those are like the predominant challenges, like the top six challenges that our researchers found.
18:23
Matt Alder
So were both at the HR Technology conference a couple of weeks ago, just surrounded by agentic AI. It was possible to be, I think from kind of walking around that show, you’d think that every single employer in the world was already using and deploying AI agents. That’s obviously not the case. What did you sort of find out about attitudes to agentic AI or knowledge of agentic AI in with this kind of particular audience?
18:48
Sven Elbert
It’s obviously the big hype factor and probably where more transformational outcomes are going to be achieved with. However, the topic is still very new at HR Tech. As you said, there have been lots and lots of announcements made. We have asked a hygiene question, if you like, in the survey. Do you understand the potential of agentic AI to support and transform your TA team? And 59% have said yes. So I think that’s first of all a good sign that at least almost 60% of TA professionals and leaders are saying yes. It’s something where we kind of see the potential, but then there’s like the others are a bit unsure or don’t necessarily see it. So that definitely means there’s an educational piece that is still quite important around it in terms of adoption and what companies are in reality doing with it.
19:51
Sven Elbert
A lot of it is still more in the experimental piloting phase. Maybe roughly 10% have introduced, for example, agentic AI in automated interview scheduling. So that’s already 10% of the survey respondents that said we are using it already, and those that are using it are finding value from it. But it obviously also means you need to think very carefully about what target groups you applied for. Do you apply to all at the same point in time, starting with everybody, like a big bang? Or do you go in small incremental steps? AI is something that I think of as a journey in terms of implementing it. It’s not necessarily something that you say, all right, let’s buy this thing. And then it’s this monolithic block and you implement it and then you walk away from it and never need touch it again.
20:49
Sven Elbert
It’s definitely something because the rate of innovation is so high, that keeps evolving. And so you need to start small. Like, remember when you. When we first implemented the first ats, we needed to build all these communication templates to send emails to candidates in an automated way. Right. And with AI it’s similar. You need to build some of those foundations in to then be to leverage some of these more agentic use cases later on. And I think that obviously means you have to do the pre work before you can actually do a lot of that before you can actually leverage some of the value that’s maybe sitting in it.
21:27
Matt Alder
As a final question, where do you think these trends are taking us? What do you think is kind of likely to happen so particularly with AI in the next sort of year or so?
21:36
Sven Elbert
Oh, in the next year or so. Now you’re asking a long kind of horrible question. That’s a really difficult question. Yeah, yeah, no, totally. No, I mean what I. So, I mean our research has shown that in terms of what the vendors are doing, there’s actually not much mainstream features. So mainstream meaning those features that have, you know, 50% of the vendors have it live with their customers. Right. So that let’s. There were only four features that majority of vendors had live with their customers and those actually were things that were around for a longer time like CV parsing or maybe some generative AI to create job descriptions, which is like the predominant use case that everybody was skating towards like right at the beginning, like one and a half years ago.
22:30
Sven Elbert
So in terms of that, both the vendors and the corporates on their journey are still on the very early phases of adopting and some have made a decision to invest heavily into a vendor that is more leaning into AI. And it’s maybe not, it’s maybe something that sits on top of something that they already have, whether that’s an suite, a TA suite or something else, but which is more dedicated in terms of providing those more advanced agentic use cases or whatever. And that certainly then means you have more technology to maneuver, more integrations to handle more problems getting the data together, making sense of it all and these kind of things. So you need to manage your ecosystem. And some companies have then said, no, let’s wait a little bit longer and see how this unfolds.
23:31
Sven Elbert
Maybe they haven’t yet made the big investment, which I think was good for 2024. I think 2025 is the moment where you should really seriously consider to think about where do you want to make the bets? Definitely start with really reimagining your TA processes and thinking big of what they can be and should be in an AI world and where more automation is possible. And then think about what are the aspects you want to attack first and then find a vendor that can help you on that journey that you trust in terms of the roadmap and you know, the longer term vision that they have for this. So then that becomes a 2026 decision probably, since we’re already in October. Right.
24:23
Sven Elbert
And for from the vendor’s perspective, these agentic use cases or features like a sourcing agent or volume recruitment agent or I don’t know, all sorts of agents that are now around. Right. They are more still the next wave features or the edge advantage features. So I would expect those to come to the majority of corporates only in the next 12 to 18 months. So from that perspective there’s probably still some time to prepare and think about what your future processes should look like and then make the decision next year or when the next renewal point with your existing solution comes up, maybe ask the vendor some questions around what are their plans and make sure that they are skating in the direction that you think is the useful one as their customer. Right. So will we see more agentic? Yes, obviously that’s.
25:27
Sven Elbert
Where will we see more automation? Yes. There is certainly a lot of things that you need to consider in terms of what candidate experience does that create. Is that what you want? And we’ve seen this like in high volume hiring there has been a lot more automation than in higher skilled roles. For example, like I’ve seen workflows where they have like completely automated the hiring flow, no human interaction whatsoever. As a candidate you would just go to the career side, apply to the job, upload your driver’s license, answer a few other questions around work permit and what have you, do a bit of an assessment, maybe automated as well.
26:09
Sven Elbert
And then you would almost get, if you pass all of this, you would almost get automatically a contract offer that you signed electronically, picked the shift when you wanted to start working on the next Monday morning or whenever and then you would start. Right. But you’ve never actually talked to a recruiter or a hiring manager. Is that a good experience? This is obviously what, where we need to kind of obviously make those considerations around human interaction is important. People want to belong to the team. They want to work for an employer that has a purpose and these kind of things that hasn’t gone away really. And so those companies that have started that have seen higher turnover rates after the fact and obviously now they’re bringing back some more in person interviews again.
26:57
Sven Elbert
So I think from that perspective it’s good to kind of see where you can automate more and what those areas are. But you need to have a very clear understanding of the roles where you want to do this, where you can do this, where you should be doing this, and where it helps. And then also stay away from more automation on the roles where it hurts you. Right.
27:20
Matt Alder
So there’s a huge amount of sort of education and conversation and decisions to be made. It’s going to be an interesting 12 months, definitely. Sven, thank you very much for talking to me.
27:30
Sven Elbert
Thanks, man.
27:32
Matt Alder
My thanks to Sven. You can follow this podcast on Apple Podcasts on Spotify or wherever you listen to your podcasts. You can search all the past episodes@recruitingfuture.com on that site. You can also subscribe to our weekly newsletter, Recruiting Future Feast, and get the inside track on everything that’s coming up on the show. Thanks very much for listening. I’ll be back next time, and I hope you’ll join me.
